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Montana is on the verge of implementing substantial cuts to its individual income tax rate, joining a growing trend among states seeking to eliminate this tax entirely.
Last week, Republican Governor Greg Gianforte publicly endorsed Senate Bill 323, which aims to reduce the state income tax from 5.9% to 4.9%. During a news conference held in conjunction with Americans for Prosperity, Gianforte highlighted the significance of this proposal.
Reflecting on his tenure, Gianforte remarked, “I came into office four years ago after 16 years of Democratic leadership in the governor’s office in Montana, and at that time, we boasted the highest income tax rate in the Rocky Mountain West.” He added, “I firmly believe that Montanans are best suited to manage their finances rather than the government. Thus, reducing the tax rate and simplifying our tax code became a priority. We have already transitioned from seven tax brackets to two, and this new proposal aims to lower the income tax rate further, moving us closer to a flat tax system.”
If enacted, this legislation would significantly reduce Montana’s already high tax rate compared to neighboring states. In recent years, residents experienced a gradual reduction from 6.9% to 6.75%, before settling at the current 5.9%. This marks a substantial transformation, as the state has streamlined its tax structure from seven brackets to just two since 2021.
Gianforte further emphasized, “This bill represents the most conservative tax cut initiative currently before our legislature, and given our conservative majority, I remain optimistic about its prospects.”
The current iteration of Senate Bill 323 outlines a phased approach: the tax rate would decrease to 5.4% in 2026, with the full 4.9% rate scheduled to take effect in 2027, according to the fiscal note associated with the legislation.
Local supporters of the bill view it as a crucial step toward alleviating economic pressures. Bianca Lester, a single mother of four from Butte, expressed her support, stating, “As a Montanan feeling the financial strain from the current rising cost of living, this bill would bring much-needed relief. I need every cent to support my kids, and such a change would allow families like mine to retain more of our hard-earned money.”
In a notable endorsement, Donald Trump Jr. voiced his approval for the proposed tax cuts. He commented on social media, “Gianforte is advocating for the largest income tax cut in Montana’s history, mirroring the historic tax cuts championed by my father. Montana is paving the way with conservative, Trump-style tax policies. Let’s make this happen! #MAGA.”
Meanwhile, similar developments occur across the nation. Mississippi Governor Tate Reeves recently signed legislation to phase out the state’s income tax altogether, aiming to stimulate economic growth in the southern region. In Montana, additional legislative efforts are underway to address property taxes, reflecting a broader movement towards tax reform.
At the national level, discussions around tax reform persist, driven by President Donald Trump and congressional Republicans. Proposals include eliminating taxes on tips and overtime pay and advocating for further cuts to income taxes, continuing the momentum for tax relief.
As Gianforte noted, “I am eager to see this measure through to completion, as I believe Montanans are in the best position to decide how to utilize their finances compared to government intervention.”
This anticipated change in Montana’s income tax structure could have wide-ranging implications for residents, potentially reshaping the economic landscape by allowing individuals and families greater financial freedom.
